Unicomb & Anor v Cairns
[2009] FMCA 202
•13 March 2009
FEDERAL MAGISTRATES COURT OF AUSTRALIA
| UNICOMB & ANOR v CAIRNS | [2009] FMCA 202 |
| BANKRUPTCY – Application to set aside a Bankruptcy Notice – applicants claim that the sum specified in the Bankruptcy Notice is incorrect – claim to be confused and misled as to the precise amount being claimed by the creditor. |
| Bankruptcy Act 1966 (Cth), ss.40(1)(g), 41(5)(6A) Bankruptcy Regulations 1996 (Cth), reg.4.01(1)(b) Legal Profession Act 2004 (NSW), ss.368, 369, 379 Uniform Civil Procedures Rules2005 (NSW), r.36.10 |
| Adams v Lambert [2006] HCA 10 Practice & Procedure of the High Court and Federal Court of Australia (Sydney: Butterworths 1991) |
| First Applicant: | MICHAEL CHARLES UNICOMB |
| Second Applicant: | WARREN DONALD TURNER |
| Respondent: | SUZANNE ROSE CAIRNS |
| File number: | SYG 3120 of 2008 |
| Judgment of: | Lloyd-Jones FM |
| Hearing date: | 17 February 2009 |
| Delivered at: | Sydney |
| Delivered on: | 13 March 2009 |
REPRESENTATION
| Solicitors for the Applicants: | Mr M. Foley of Foleys Solicitors |
| Counsel for the Respondent: | Mr J. Baird |
| Solicitors for the Respondent: | Mullane & Lindsay Solicitors |
| Agent for the Respondent’s solicitors: | Sally Nash & Co. Solicitors |
ORDERS
The application filed by Michael Charles Unicomb and Warren Donald Turner on 27 November 2008 to set aside the Bankruptcy Notice (NN4001 of 2008) is dismissed.
The Applicant Debtors, Michael Charles Unicomb and Warren Donald Turner, are to pay the Respondent Creditor, Suzanne Rose Cairns, costs to be agreed or assessed.
| FEDERAL MAGISTRATES COURT OF AUSTRALIA AT SYDNEY |
SYG 3120 of 2008
| MICHAEL CHARLES UNICOMB |
First Applicant
| WARREN DONALD TURNER |
Second Applicant
And
| SUZANNE ROSE CAIRNS |
Respondent
REASONS FOR JUDGMENT
The proceedings
By an application filed on 27 November 2008, Michael Charles Unicomb and Warren Donald Turner (the Applicant Debtors) seek, pursuant to s.40(1)(g) of the Bankruptcy Act 1966 (Cth) (“the Act”), to have the Bankruptcy Notice (NN 4001 of 2008) issued by Suzanne Rose Cairns (the Respondent Creditor) set aside. The applicants dispute the validity of the Bankruptcy Notice on the ground that there was a misstatement of the correct amount and that they were confused as to the correct sum allegedly due to Ms Cairns. That application is opposed by Ms Cairns.
The following evidence was filed by the Applicants in these proceedings:
a)Affidavit of Michael Charles Unicomb sworn 27 November 2008;
b)Affidavit of Warren Donald Turner sworn 27 November 2008.
The following evidence was filed by the Respondent in these proceedings:
a)Affidavit of Anthony David Cavanagh sworn 12 December 2008;
b)Affidavit of Ashleigh Elizabeth John sworn 16 February 2009.
Background
In setting out the following background material I have either paraphrased or quoted directly from the affidavits of Messrs Cavanagh and Turner together with the oral submissions of Messrs Foley and Baird. I have not made direct attribution as this would make the summary unwieldy. The information is provided to assist in understanding the nature of the application and not to establish any evidentiary point.
Mr Cavanagh is a partner of the firm Mullane & Lindsay Solicitors who act for Ms Cairns. He states that on 23 October 2008 his firm instructed ARA Carwell Mercantile, Process Servers to serve a Bankruptcy Notice on both Mr Unicomb and Mr Turner. On 13 November 2008, Mullane & Lindsay received confirmation that the Bankruptcy Notice had been served on 6 November 2008. Mr Turner’s affidavit indicates that he was served with Bankruptcy Notice NN4001 of 2008 dated 20 October 2008. Mr Turner states that the debt the Bankruptcy Notice refers to was founded on two costs determinations obtained by Ms Cairns in proceedings commenced by her in the Supreme Court of New South Wales proceedings No.5237 of 2006 in Sydney. Mr Turner states that he caused a review of those cost determinations and filed all necessary forms with the costs review panel within the time period allowed.
Both Messrs Unicomb & Turner state in their affidavits that they were confused and misled about the precise amount claimed by Ms Cairns:
6. I believe that the sum specified in the notice is, on one hand, an understatement of the amount in fact due to the respondent and, on the other hand, it is an overstatement as it attempts to claim interest on the judgment. I am confused as to the correct sum allegedly due to the respondent. I am confused by the sum identified on the Notice as being due to the respondent to this application. There appears to be a number of errors contained in the calculation schedule that forms part of the notice.
Mr Turner’s affidavit also states:
7. I have given the respondent a notice pursuant to the provisions of s.41(5) of the Bankruptcy Act, 1966 in the form of a letter from my solicitors Foleys, disputing the validity of the Notice on the grounds of the misstatement of the correct amount. Annexed to the affidavit of Michael Charles Unicomb and marked “B” is a true copy of a letter dated 21 November 2008 from my solicitors, Foleys addressed to Mullane & Lindsay, the solicitors for the respondents. Since I am informed by Michael Foley, my solicitor, and I invariably believe, as the signatory of that letter, caused that letter to be faxed to Mullane & Lindsay, solicitors before the Bankruptcy Notice expired on 21 November 2008.
Submissions made on behalf of the Applicants
Mr Foley acknowledges that the Bankruptcy Notice follows the prescribed form and complies with all of the requirements except as to the amount of the judgment/order which appears in the Schedule on page 5 of the Notice. Mr Foley relies on the affidavits of Messrs Unicomb and Turner.
Mr Foley referred the Court to the judgment/order issued by a Registrar of the Supreme Court of New South Wales, Equity Division (number 5791 of 2005) which contains the following:
Terms of order
Judgment for the plaintiff in the sum of $105,925.86 as per certificate as to determination of costs issued on 12 August 2008 and 14 September 2008.
The certificate of judgment for the amount of $105,925.86 is made up of two amounts being that of 12 August 2008 for $3,272.50 and that of 14 September 2008 for $102,650.36. Mr Foley submits that both these amounts were amalgamated into the one judgment. However, the Schedule on page 5 of the Notice states:
1. Amount of judgments or orders $102,653.36
Mr Foley submits that this is at odds with the amount in the certificate of judgment.
In respect to the interest claimed the “Schedule of Interest” to the Notice states:
Interest is claimed pursuant to s.101 Civil Procedure Act 2005 as follows:
from 10/10/2008-16/10/2008
Amount claimed: $102,653.36
That is only part of the judgment amount that the certificate of judgment covers. Mr Foley submits that the argument put forth by the Applicants is that the certificate of judgment is for $105,925.86, being one and not two separate judgments. It is acknowledged that this is not a case where two separate judgments are attached but only one is relied upon. This is a joint judgment order for the whole of the amount which is not separable as appears in the Schedule of the Notice. Mr Foley argues that this is a gross error and it is confusing to claim only part of the judgment amount, with interest also calculated on part of the judgment amount.
Mr Foley submits that to ensure that the appropriate steps were taken before expiry of the Bankruptcy Notice, he wrote to Mullane & Lindsay on 21 November 2008 indicating that the Bankruptcy Notice misstated the amount due to the creditor and was defective or irregular. He also indicated that the Bankruptcy Notice was fundamentally flawed and should be withdrawn. A further facsimile was sent to Mullane & Lindsay on 27 November 2008 again asking them to confirm whether or not they wished to proceed with the Bankruptcy Notice given its obvious and incurable defects. Mr Foley indicated that even applying the most liberal interpretation of Adams v Lambert [2006] HCA 10, the defects in the Notice could not be cured. In the absence of any response, the Applicants commenced these proceedings.
Submissions made on behalf of the Respondent
Mr Baird submits that in the terms of the evidence, the parties are in dispute which is expressed in the letter from Foleys to Mullane & Lindsay dated 21 November 2008 (affidavit of Mr Cavanagh, Annexure “B”) and in the letter from Mullane & Lindsay to Foleys dated 8 December 2008 (affidavit of Mr Cavanagh, Annexure “D”). Mr Baird drew the Court’s attention to the separate ground that the actual costs assessment itself was subject to review. Annexure “E” of Mr Cavanagh’s affidavit is a letter from Foleys Solicitors dated 27 November 2008 serving various documents initiating these Federal Magistrates Court proceedings. The application to set aside the Bankruptcy Notice contains two grounds, including an application under s.41(6A) of the Act.
Mr Baird referred to Annexure “F” of Mr Cavanagh’s affidavit which contains the relevant certificates of determination being:
a)Form 3, Certificate as to determination of costs, assessment of party-party costs in the amount of $102,653.36;
b)Form 4, Certificate as to determination of costs assessor, assessment of party-party costs in the amount of $3,272.50.
Annexure “G” of Mr Cavanagh’s affidavit is a letter from Gordan A. Salier, the review assessor, dated 4 December 2008. The costs assessment was subject to a review application that was determined by Mr Sallier and others. His letter issued on behalf of the review panel on 4 December 2008 specifies that upon payment of $1540.00, the certificates would be available to Messrs Unicomb and Turner for collection. Annexure “H” to the affidavit of Mr Cavanagh is a letter from John Sharpe, a member of the review panel. The letter is addressed to Mr Turner and states that upon a payment of $385.00 to the Supreme Court, the certificate will be issued in relation to Mr Turner. Annexures “A”, “B” and “C” to the affidavit of Ashleigh Elizabeth John are the relevant invoices issued by the Supreme Court on 12 December 2008 in relation to the review certificates in the amount of $1,540.00 due on 9 January 2009. The first invoice addressed to Mr Unicomb is in the amount of $1,540.00. The second invoice addressed to Mr Turner from the Supreme Court issued on 15 December 2008 is in the amount of $385.00, with payment due on 12 January 2009. The third invoice was issued to Australasian Land Bank Holdings which is not a party to this application and is not relevant to these proceedings.
Annexure “F” to Ms John’s affidavit is a letter from Mullane & Lindsay to Mr Foley dated 5 February 2009. The second paragraph of that letter states:
When this matter was last before the Court on 16 December 2008 you informed the Court that the review of the costs determination, which is the subject of the Bankruptcy Notice, had been completed but the result was unknown. In correspondence received from Mr Gordon Salier and Mr John Sharpe dated 4 December 2008 (see Annexure “G” and “H” to the affidavit of Aide Cavanagh sworn 12 December 2008), all parties were informed that the results were available upon payment of the review costs. We have been informed by the manager, costs assessment that the review costs are payable by your clients. It is not the responsibility of our client to pay these fees.
Annexure “G” to Ms John’s affidavit is a letter from Foleys Solicitors to Mullane & Lindsay dated 5 February 2009 which states:
As we all know there is a review of costed termination granted in favour of Mrs Cairns that has been completed and which are now ready for collection. When we asked the Federal Magistrates Court on 16 December 2009 for a further period in which to file further evidence it was our intention to attach that review document to an affidavit and file it in these proceedings.
However, to date neither party has collected (or paid for) that review.
It may be that this matter will have to be decided without the benefit of that evidence when it is heard by the Court.
Annexure “H” to Ms Johns’ affidavit is a letter from Mullane & Lindsay to Mr Foley of 6 February 2009 which states:
In view of s.379 of the Legal Profession Act 2004, there is no reason why our client is responsible for the payment of the costs of the review.
Mr Baird submits that there is an obligation upon the applicants under s.379 of the Legal Profession Act 2004 (NSW) that costs are payable by the applicants where the application for review is either refused or the amount is reduced by less than 15%.
Mr Baird submits that in the letter from Mullane & Lindsay dated 8 December 2008 (affidavit of Mr Cavanagh, Annexure “D”) the leading decision referred to in that letter is the decision of Croker v Deputy Commissioner of Taxation [2005] FCA 127 (“Croker”) per Hely J. The headnote to that decision states:
BANKRUPTCY - …costs of registering the certificate may not properly be added upon the filing of that certificate…
Paragraph 2 of that decision states that this was a local court judgment where a cost assessor has issued a certificate under the then s.208J of the Legal Profession Act 2004 (NSW) (now s.369). In that case the debt was $12,972.30 and the registration cost was $63.00. The amounts were separately shown. The total was some $13,035.30 and the Bankruptcy Notice was issued for the total amount of $13.035.30. That amount was held to be incorrect in that case for two reasons. Appearing at [5] is the calculation of interest claimed, again on the combined total of $13,035.30. That interest calculation was held to be incorrect once the principal sum was found to have been incorrectly claimed.
Justice Hely also considered the proper way to claim an amount for assessed costs as prescribed by the Legal Profession Act – which is for the assessment to be lodged with and registered as a judgment of the appropriate court: Croker at [9]-[18]. His Honour held that a costs assessment was not payable to the plaintiff/judgment creditor: ss.368, 369 and 379 of the Legal Profession Act.
Mr Baird referred the Court to the following parts of s.369 of the Legal Profession Act:
(8) The costs of the cost assessor are to be paid to the Manager, Costs Assessment;
(9) Manager, Costs Assessment may take action to recover the costs of a cost assessor or Manager, Costs Assessment.
Mr Baird submits that these amounts could not be claimed by the plaintiff/judgment creditor in Croker. The amount of $63.00 was found to be fatal by His Honour Hely J because it was claimed with respect to the entry of costs which was not payable to the judgment creditor. Mr Croker’s contention was that the Bankruptcy Notice was invalid and this was held to be correct: Croker at [9].
Mr Baird referred the Court to the following passages in Croker:
[13] In Croker v Federal Commissioner of Taxation (2003) 52 ADR 226 the Full Court said of a certificate such as the present (at 230):
The purported “registration” of such a certificate as a judgment by the registrar of the Local Court is a mere clerical entry in the records of that court. It is not an order pronounced or a judgment given by a superior court of record.
[14] When a certificate is filed with the Local Court, the Local Court does not adjudicate upon anything. The records of the Local Court either correctly reflect the operation of s 208J(3) of the LPA in the circumstances of the case or they do not. If they do not, then the issue of a ‘certificate of judgment’ which incorrectly reflects the operation of s 208J(3) is devoid of any legal effect.
Mr Baird submits that this is the position that pertains to the matter before this Court.
The Supreme Court judgment/order was correctly entered in the Bankruptcy Notice pursuant to the certificate of costs prepared by the assessor. The two separate amounts were correctly recorded under the heading “Date of order” as follows:
12 August 2008 as at $3,272.50
14 September 2008 as to $102,653.36
Mr Baird submits that as in Croker and under s.369(8) of the Legal Profession Act, the judgment creditor can only claim the amount of $102,653.36. The judgment creditor is not entitled to claim $3,272.50. Croker was followed recently in Gorczynski v Perera & Anor [2008] FMCA 55 per Raphael FM.
Mr Baird submits that the judgment creditor has claimed in the Bankruptcy Notice the amount to which Ms Cairns is entitled under the judgment, namely, $102.653.36. The calculation of interest is on this principle amount. Based on the authority of Croker, the Bankruptcy Notice has been issued on the correct amount. Mr Baird claims that the Supreme Court has issued a judgment that clearly shows two separate amounts and the creditor has claimed the amount she is entitled to. When a certificate of costs is issued both parties have been involved in the process. Both parties would have received a costs assessment and there should be no confusion about the proper amount of the assessment.
Submissions in reply
Mr Foley submits that Croker is distinguishable from this matter. In that case, there was a certificate of judgment and an additional amount of $69.00, which was the attempted cost of registration of the certificate. That is an amount different and outside of what is on the certificate of judgment. Mr Foley submits that Gorczynski v Perera (which follows Croker) states that if a fee is added to the certificate of judgment then that constitutes an overpayment and the Bankruptcy Notice would be invalid. Although Mr Foley agrees with those principles, he disagrees that they apply to the Bankruptcy Notice which is before this Court because the certificate of judgment is for $105,925.86. Mr Foley submits that the certificate of judgment is made up of two amounts and it appears that only part of the total is being pressed in the Bankruptcy Notice and in the amount of interest being claimed. It is submitted that there are no individual certificates of how these amounts were ascertained or that there is anything else attached to the Bankruptcy Notice. There is merely the certificate of judgment for $105,925.86 and any attempt to claim part of it, rather than all of it, is clearly misleading and confusing. He submits that this had led to a substantial error which cannot be cured.
Mr Foley submits that there is a substantial defect which appears on the Bankruptcy Notice and the application of the principles enunciated in Adams v Lambert [2006] HCA 10 and Australian Steel (Operations) Pty Ltd v Lewis (2000) 109 FCR 33 does not save the Notice. He submits that this is not a case where there are two judgments with an election to pursue one but not the other. In this case there is one judgment with one amount even though on the face of the judgment/order there appears to be two dates and two amounts with no further explanation. Mr Foley submits that nothing that can solve the confusion and the Notice should be set aside.
Consideration
Regulation 4.01(1)(b) of the Bankruptcy Regulations 1996 (Cth) (“the Regulations”) requires an applicant for a Bankruptcy Notice to lodge with the Official Receiver one of the following documents in respect of a final judgment or final order specified by the applicant on the approved form:
(i) a sealed or certified copy of the judgment or order;
(ii) a certificate of judgment or order sealed by the court or signed by an officer of the court;
(iii) a copy of the entry of the judgment or order certified as a true copy of that entry and sealed by the court or signed by an officer of the court;
The debt incurred by Messrs Unicomb & Turner was for costs pursuant to certificates of determination of the costs assessment under s.369 of the Legal Profession Act. Attached to the Bankruptcy Notice is a document entitled Judgment/Order in Form 43 (Version 1) of the Uniform Civil Procedures Rules Forms. It refers to the judgment/order of the Supreme Court of New South Wales, Equity Division, case number 5791 of 2005. The plaintiff is Suzanne Rose Cairns, the first defendant Warren Donald Turner and five other defendants. Under the heading “Date of Order” appears the following:
12 August 2008 as to $3,272.50
14 September 2008 as to $102,653.36
Under the sub-heading “Terms of Order” appears the following:
Judgment for the plaintiff in the sum of $105,925.86 as per the certificate as to the determination of costs issued on 12 August 2008 and 14 September 2008.
The document is sealed by the Court and is stamped with the name Bhaskari Siva (L.S.) in the capacity as Deputy Registrar dated 9 October 2008.
The amount of interest set out in the Schedule of Interest attached to the Notice states:
Interest is claimed pursuant to s.101 Civil Procedures Act 2005 as follows:
From 10/10/2008 to 16/10/2008
Amount claimed:
$102,653.36
For seven days at 10.00% per annum
Amount $196.87 and continued at a daily rate of:
28.12420
There are three steps required before a Bankruptcy Notice can be issued. There is the creation of a judgment pursuant to s.368 of the Legal Profession Act and then the entry of the judgment as required by s.133 of the Civil Procedure Act 2005 (NSW) and r.36.10 of the Uniform Civil Procedures Rules 2005 (NSW). Then there is the requirement of proof of entry of judgment by the issue of the certificate under r.36.10. Proof of entry of the final judgment is required by reg.4.01 of the Regulations. I am satisfied that the Bankruptcy Notice does contain one of the three document types referred to in the Regulations. I am satisfied that the Bankruptcy Notice is in the form prescribed by the Act and the Bankruptcy Regulations.
The Notice pursuant to s.41(5) of the Act was sent to Mullane & Lindsay from Foleys dated 21 November 2008 claiming that the Bankruptcy Notice was defective on its face and that there may be a number of errors in the calculation of the amount and interest claimed.
The letter then states:
Accordingly, please regard this letter as constituting the requisite notice pursuant to the relevant provisions of the Bankruptcy Act, 1966 and the debtors Michael Charles Unicomb and Warren Donald Turner, dispute the validity of the Bankruptcy Notice addressed to each of them on the grounds that it is formerly defective AND that our client is misled as to what is necessary to comply with this Bankruptcy Notice.
Clearly, these defects are substantive and accordingly, we are of the opinion that the said Bankruptcy Notice is fundamentally flawed and we believe that you should immediately advise us in writing that your client agrees to withdraw the Bankruptcy Notice by 2pm Wednesday 26 November 2008. Failure to do so will leave our client with no other alternative than to make an application to the Federal Magistrates Court seeking the necessary orders setting aside the said Bankruptcy Notice.
A follow up facsimile transmission dated 27 November 2008 from Foleys to Mullane & Lindsay confirms the earlier correspondence dated 21 November 2008 and indicates the intention to immediately file an application with this Court.
Also in evidence is the response from Mullane & Lindsay to Foleys dated 8 December 2008 in which each of the issues raised in the letters dated 21 and 27 November 2008 was addressed. I note that this letter was issued after these proceedings commenced. The main issue between the parties concerns the alleged understatement of the amount due. I note that the judgment/order issued by the Supreme Court on 9 October 2008 includes both the costs assessment and its costs. These individual amounts are set out separately in that judgment/order. The amount claimed in the Bankruptcy Notice is $102,653.36 which is the value of the costs assessment and action can be taken to recover this amount. I am of the view that the creditor is entitled to the amount of $102,653.36 and that this was correctly stated in the Bankruptcy Notice.
In Wolf v Deputy Commissioner of Taxation (1994) 156 CLR 337, Gibbs CJ (with whom the other members of the Court agreed) stated at 339:
There is no doubt that a Bankruptcy Notice will be invalid if the sum specified in the Notice has the amount due to the creditor exceeds the amount for which the creditor is entitled to issue execution.
I am satisfied that the evidence before the Court indicates that the amount claimed in the Bankruptcy Notice is valid. The Supreme Court has properly issued a judgment which clearly shows the two separate amounts. The costs assessment is the amount correctly claimed in the Bankruptcy Notice.
The issue that remains to be resolved is to whether the debtors can validly claim that they were misled by the contents of that Notice. Initially as a point of clarification both the affidavits of Messrs Unicomb and Turner contained the following statement:
3. The debt that this Bankruptcy Notice relates to is founded on two cost determinations obtained by the respondent in proceedings commenced by her in the Supreme Court No.5237 of 2006 at Sydney.
This appears to be an error common to both affidavits as the Bankruptcy Notice is founded on case number 5791 of 2005.
To determine whether the debtor could be misled by a Bankruptcy Notice, the Court is not confined to a mere examination of the Notice itself. It may look at facts extraneous to the Notice: Re Wimborne; ex parte the Debtor (1979) 24 ALR 494. The following information was contained in the affidavits read in these proceedings but not specifically addressed by the representatives of either of the parties. However, I believe it clearly indicates the context and the circumstances surrounding the litigation giving rise to the debt and the subsequent steps which followed leading up to the service of the Bankruptcy Notices.
The affidavit of Mr Cavanagh sets out the following paragraphs:
11. The judgment entered on 9 October 2008 [a true copy of which forms part of Annexure A] provides for payment to Suzanne Cairns by the Debtors of two amounts, being $102,653.36 as per Certificate as to Determination of Costs issued on 14 September 2008 and $3,272.50 as per Certificate of Determination of Costs of Costs Assessor dated 12 August 2008.
12. Annexed and collectively marked “F” are copies of
(i) Certificate as to Determination of Costs dated 14 September 2008
(ii) Certificate as to Determination of Costs of Costs Assessor dated 12 August 2008
13. So far as I am aware, the addresses for the Debtors referred to in annexure F are their correct addresses. I understand that copies of the Certificates comprising annexure F were sent to each of the named respondents, by either the Manager, Costs Assessment or by the Costs Assessor, Mr Cockburn, at the same time copies were sent to Mullane & Lindsay.
14. On or about 16 September 2008 Mullane & Lindsay had received both the documents comprising annexure F.
No evidence was led to indicate that the above information is not correct. The Bankruptcy Notice was issued by the Official Receiver on 20 October 2008 and both Messrs Unicomb and Turner acknowledged service on 6 November 2008.
Accordingly prior to receiving the Bankruptcy Notice Messrs Unicomb and Turner were in receipt of the Certificates of Costs Determination and should have been aware of the correlation between them and the amounts appearing on the Bankruptcy Notice. Both of them had access to legal practitioners competent in the bankruptcy jurisdiction who should have been able to clarify what a creditor was entitled to claim in the Notice. In these circumstances it is difficult to accept that there was confusion about the amount that could be claimed on a Bankruptcy Notice. Significantly both the affidavits of Messrs Unicomb and Turner contain the following statement:
…I have caused a review of those cost determinations due to be undertaken and have filed all necessary forms within the time period allowed with the cost review panel.
This statement confirms both the receipt and understanding of the cost certificates by both individuals.
The Practice & Procedure of the High Court and Federal Court of Australia (Sydney: Butterworths 1991) at [80,915.70] “Understatement of debt due” refers to Kleinwort Benson Australia v Crowell (1988) 165 CLR 71 per Mason CJ, Wilson, Brennan and Gaudron JJ:
Understatement of the amount due, whether it is an understatement of the judgment debt or of interest payable thereon, will thus constitute a defect which is substantial rather than formal only if the understatement is objectively capable of misleading the debtor as to what is necessary for the compliance with a notice. It may be that, in a given case, understatement is capable of misleading of the judgment debtor particularly if the notice is capable of producing uncertainty as to whether the debtor is required to pay the amount in fact due or the amount specified in the notice. In such a case uncertainty arises, not merely from the understatement, but from the understatement in the context of the particular Bankruptcy Notice. No such uncertainty arises if it is clear that payment of the amount specified in the notice will constitute compliance with the notice. (emphasis added)
The Bankruptcy Notice clearly states:
1. Suzanne Rose Cairns (“the creditor”) of:
c/-Mullane & Lindsay solicitors
Level 3, 418 Hunter Street NEWCASTLE NSW 230
claims you owe the creditor a debt of $102,850.23, as shown in the Schedule…
3. You are required, within 21 days after service on you of this Bankruptcy Notice:
(a) to pay the creditor the amount of the debt; or
(b) to make an arrangement to the creditor’s satisfaction for settlement of the debt.
On a clear reading of the Bankruptcy Notice there can be no confusion that the amount of the debt is $102,850.23. Paragraph 3 sets out how compliance with the Notice can be achieved. I am not satisfied that the above instructions were in any way misleading or difficult to comply with. In the circumstances, I am satisfied that the application to set aside the Bankruptcy Notice should be dismissed.
I certify that the preceding forty-four (44) paragraphs are a true copy of the reasons for judgment of Lloyd-Jones FM.
Associate:
Date: 13 March 2009
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